(Yicai Global) March 5 -- The German government is amending its policies in response to the acquisition of Daimler AG, the parent company of Mercedes-Benz, by Geely Holding Group so that Chinese investors will face greater difficulty buying German firms in future, Peter Mandelson, former EU trade commissioner and the current chairman of Global Counsel LLP, told Yicai Global at Yabuli China Entrepreneurs Forum.

Income inequality in Western countries has roused public concerns about foreign investments. Therefore, German politicians opposed a Chinese company buying their technology company, and since they discovered they could not use political power to stop the acquisition, the government sough policy changes, Mandelson said.

Geely acquired 9.69 percent of voting shares of Daimler through a subsidiary for USD9 billion making it Daimler's largest shareholder and has promised to hold its shares for the long term, it said Feb. 24.

The German government would thoroughly investigate the merger and acquisition, Media reported, but the government subsequently denied this. Merkel, Chancellor of Germany, said that the government has not found any regulatory violations in this acquisition.

Worsening income inequality in Western countries will affect the attitudes of the public and the policymakers toward foreign investors, Mandelson believes. Thus, Chinese investors must tailor their investments plans to different countries and need more time and patience to understand locals and markets.

Chinese entrepreneurs must understand the views of other countries in the world to China, and how these views have been changed, he said, the inequality is worsening in Europe and the US, making people resentful, unstable and unpredictable, and it has affected policies as well.

Wealth is increasingly concentrated in hands of those who are already the richest in Western nations, he noted. One percent of the population In the US and Canada obtains two-thirds of the increase of national income, while in Europe, the top 2 percent claimed most. Slow economic growth makes people pessimistic and anxious.

Eighty-one percent of Chinese believe their children will be financially better off than themselves, while only 37 percent of Americans do, and in France, that is only 9 percent. With the development of artificial intelligence and automation technology, people are anxious about employment, Mandelson added.

Such anxiety can affect people's political appeals and their views on foreign capital and assets, he thinks. They fear that foreign acquisitions may reduce their salaries, make them poorer, and accelerate their unemployment and so hope their governments can regain control; this is the 'Trump phenomenon.'

Society is more hostile to foreign direct investments in the UK, France, Australia and America. Politicians have changed their policies on foreign investment in both China and other countries, Mandelson said.

Competition and openness are the sources of creativity and innovation, he believes. China and Western countries should all open their markets to competitors.

Japanese firm SoftBank Group Corp. acquired British processor design company ARM for GBP24 billion (USD33 billion) in July 2016. Britons worried that its most successful technology company would lose its independence. British Prime Minister Teresa May said she did not object that overseas companies purchased British companies, but that such acquisition must be based on the national interest.

SoftBank still spent a lot of time to communicate with British policymakers to obtain the permission of the public and policymakers, although the acquisition did not violate the laws, Mandelson noted.

While going global, Chinese companies should take time and patience to learn and predict the local political environment, he suggested. Whether the investment is in China's neighboring Asian countries or in the West, Chinese firms must understand local political sensitivities while actively participating in and positively responding to policies as well as actively communicating with the public and policymakers. Only by appearing as a partner will Chinese companies not appear as enemies.

Entrepreneurs may need to sacrifice partial interests to integrate into international and local rules, rather than exclusively pursuing their own interests.